Global Reflections

The report analyzes a recent drawdown in high-momentum AI stocks, suggesting a rotation into Consumer, Healthcare, and ex-US Financials.

Key Takeaways

• 1.The recent momentum sell-off indicates an investor pivot away from the 'AI complex' toward laggard sectors like Consumer and Healthcare.
• 2.Healthcare is positioned as an 'AI-Uncorrelated Compounder' that benefits from AI adoption while providing a hedge against AI-specific volatility.
• 3.Higher-for-longer interest rates create downside for 'Low-Quality' stocks (non-profitable tech, HY sensitive) and favor Ex-US Financials, particularly in Europe and Japan.

Table of Contents

• Low Momo/Dual Binaries Look Appealing into Potential Inflection
• Which Equities Will Higher Rates Break?
• Healthcare is an AI-Uncorrelated Compounder
• Ex-US Financials are an Attractive Diversifier
• There is Value in Owning AI Abroad
• Is Defense Making a Comeback?

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